European stocks fall on China data

January 24, 2014 - 11:09:38 am

Traders work on the floor of the New York Stock Exchange yesterday.

LONDON: Europe’s main stock markets retreated yesterday as investors digested weak Chinese economic data and a cautious outlook from European Central Bank chief Mario Draghi.

However, the euro rallied on news that activity in the eurozone private sector economy hit a 31-month high in January as recovery gathered pace.

London’s benchmark FTSE 100 index ended the day down 0.78 percent at 6,773.28 points, while Frankfurt’s DAX 30 dropped 0.92 percent to 9,631.04 points and the CAC 40 in Paris fell 1.02 percent to 4,280.96 points.

Milan shed 0.72 percent and Madrid gave up 0.37 percent.

Markit Economics said its Eurozone Composite Purchasing Managers Index (PMI) for January rose to 53.2 points from 52.1 in December.  That was the seventh monthly increase running and the fastest rate of growth since June 2011. A number above 50 denotes expansion.

The index is a leading indicator of how the economy is performing, and is closely watched because it is regarded as broadly accurate. However the Chinese PMI compiled by British banking giant HSBC fell to 49.6 points in January, the lowest since August.

Comments by Draghi also threw cold water onto sentiment. “We see some encouraging signs but the recovery in the euro area is still weak and uneven,” the ECB chief told Swiss daily Neue Zuercher Zeitung. “All in all, the risks are still on the downside. So I would be cautious about becoming overly optimistic.

“We are now at a stage like that of the US a year and a half ago. The survey data are strong, but we don’t yet have a continuous stream of strong hard data. That’s a familiar pattern in economic recoveries after a deep crisis.”

In foreign exchange activity, the European single currency jumped to $1.3678 from $1.3544 in New York late Wednesday on the eurozone PMI data. The British pound dipped to ¤1.2144 from 1.2235, but rose to $1.6614 from $1.6569.

Gold prices firmed to $1,263 an ounce from $1,241 on Wednesday on the London Bullion Market.

Meanwhile, Asian stock markets fell after data showed Chinese manufacturing activity shrank in January for the first time in six months. Investors were given a soft lead from Wall Street after uninspiring US corporate earnings.

Tokyo retreated 0.79 percent and Sydney fell 1.07 percent, while Seoul lost 1.16 percent on news that South Korean economic growth slowed in the fourth quarter of 2013.

US stocks also moved sharply lower, with the Dow Jones Industrial Average sinking 1.02 percent to 16,206.24 points in midday trading. The broad-based S&P 500 shed 0.93 percent to 1,827.70, while the tech-rich Nasdaq Composite Index declined 0.89 percent to 4,205.10. AFP